Reuters: Pentagon Bookkeepers Wasted $8.5 Trillion

    November 19, 2013

Earlier this summer, Reuters authors Scot J. Paltrow and Kelly Carr conducted an investigation into the Pentagon’s payroll practices; in their report, the authors alleged that an unbelievable level of dysfunction is causing financial hardships for soldiers. Today, the news does not get any better as Reuters published a second expose, this one even meatier than the first.

The second part of the Reuters investigation, written by Scot J. Paltrow, claims that every month, soldiers working for the Defense Finance Accounting Service insert bogus payment numbers into their bookkeeping — in an effort to match the military’s books with the Treasury’s.

The practice is referred to as “plugging,” and one naval officer, Linda Woodford, told Reuters that she spent the last 15 years of her career inserting those fake numbers into the books. “[A] lot of times there were issues of numbers being inaccurate… We didn’t have the detail … for a lot of it,” she said.

The supervisors of the DFAS, far from disapproving, were actually expected to approve each plug, sometimes thousands of them in a single month. The Treasury would send the books back if the numbers didn’t match.

Reuters discovered that the practice of plugging is actually standard operating procedure, and that DFAS is hardly the only military accounting firm to be responsible; apparently, Pentagon record keeping is so terrible, that making stuff up to fill in the blanks is just another day at the office.

The Defense Department’s 2012 budget was $565.8 billion (larger than the next 10 largest military spenders combined). As to whether that money actually reached its intended destination, we will never know.

“Reuters has found that the Pentagon is largely incapable of keeping track of its vast stores of weapons, ammunition and other supplies; thus it continues to spend money on new supplies it doesn’t need and on storing others long out of date,” Paltrow writes.

One example of poor supply practices: between 2003 and 2011, the U.S. Army lost $5.8 billion in supplies as it moved equipment between regular units and reserve units.

Because of the Pentagon’s sheer ineptitude, it is the only government agency that refuses to comply with the law requiring an annual financial audit of every government organization. A sum of money greater than China’s economic output from yesteryear, $8.5 trillion, has been given to the Pentagon since 1996. That amounts to over $25,000 per living person in the United States.

The story is far from a cheerful anecdote, but if you’re still interested, check out the full report here.

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